How to Calculate Billable Hours
How to Calculate Billable Hours

How to Calculate Billable Hours

billable hours

Customize your billing with the option to set billable rates, depending on the client or job. Upgrade your account to get job costing features that let you track time against a project’s expected number of hours. Use retrospective reports to inform your decisions and craft more accurate estimates. Annoyingly, not everything you work on falls within your core hours. By tracking time spent outside of the office, you may discover you are actually missing out on some hidden billable hours. From business calls you received in the taxi, to late-night work requests and travel for clients, tracking non-billable time ensures you get the complete picture of everything you work on.

  • First, you’ll be able to play to each of your employees’ strengths.
  • If you charge different rates based on what you’re doing, be sure to categorize entries and group them around projects.
  • You will be able to identify those non-billable tasks which might be taking up more of your time than they should, and make appropriate changes to streamline those processes.
  • Tools you need to start optimizing outputs as soon as possible.
  • Billable hours are important because they help avoid any possible misunderstandings with clients about who is doing what and for how long.

And to do that, you need to understand how much time you spend on each type of activity. If you want, you can track only your billable hours; but, then you won’t know how much time you spend on unpaid work and won’t be able to calculate your real hourly wage. Clockify calculates billable hours you’ve worked automatically. All you have to do is track time and separate billable from non-billable hours, and Clockify will do all the rest (from calculating how much money you’ve earned to showing where each minute went). By knowing exactly which tasks constitute billable hours and how to keep track, you’ll be ready and set to optimize everything from workflows to invoicing. How many billable hours you aim for will depend on your industry and professional position.

How to Track Billable Hours

Companies that track typically use an online timesheet system that makes it easy for employees to record the exact amount of time they spend working in a given week. Since some non-billable hours help speed up the project, it is good to track this, so you can know how much non-billable time is required for a particular project. If more non-billable hours are required for a project, you may be working at a loss. You may need to renegotiate with the client or add the non-billable hours to the invoice and let the client know why you need to be paid for these. Tracking work hours helps you as a PM to know how much time your team uses. You can delegate tasks before your team burns out because you will be able to tell if they are under too much pressure.

  • You need to not only be confident about the work that you’re providing but also the billable hours you can charge.
  • If you have a quick phone call with the customer, include that!
  • Consultants and temporary workers are two other groups that use billable hours frequently.
  • The importance of your project management will depend on how you work.
  • It will be my project management software for the foreseeable future, and the only one I recommend to clients and colleagues.
  • To maximize on an attorney’s billable hours, some law practices resort to increasing their overall work hours to upwards of 70 or 80 hours per week.

Tracking your billable hours is just one part of the equation. Tracking and recording that time, invoicing for that time, and determining the productivity of that time is far more challenging. Tracking time can give you a stronger sense of time’s actual worth and makes you accountable for how you spend it. Tracking non-billable time reveals that it’s just as valuable as the time you spend on billable work. Billable hours are any time that you spend on a client’s project.

You’ll Be Able To Show How Much Value You Add to Your Clients’ Work

Now, the term “billable hours” can be somewhat deceptive because it implies that only entire hours are eligible for payment. In fact, attorneys often bill time to clients in 1/10 of an hour (or 6-minute) segments. For example, if you spent roughly 18 minutes on a task, you would bill the client .3. If you spent half an hour on a task, you would bill the client .5. Billable hours are the hours you spend on tasks that you can charge clients for.

At the end of the day, we need to change our mindset about non-billable time. If you charge different rates based on what you’re doing, be sure to categorize entries and group them around projects.

How to Differentiate Billable and Non-billable Hours in Jira?

For example, a website may provide you with local weather reports or traffic news by storing data about your current location. Some guess and some do it manually whereas others may use the many different types of software available.

How many hours should be billable?

As a general rule, if you bill between 36 and 40 hours in a week, you're likely going to be okay. Over the long run, the expectation is that you should be averaging 40 billable hours a week – assuming you have productive work to do.

These include the initial proposal to get the job and sending the invoice after it. The client would not expect you to exclude these when calculating billable hours.

Without proper tools, it’s also difficult to factor in project expenses when invoicing clients. Many workers end up realizing that they’ve been working for less than what they could have earned if only they had been able to track the hours they spent on each project. It is, therefore, a good idea to track time and leverage the benefits of time tracking tools. Failing to meet billable hours targets also spells slower growth. If you don’t have enough billable resources to keep up with new clients or projects that come in the door, you’ll need to turn down business which will slow growth.

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